Asian stocks rise, gains limited by crisis fears

HONG KONG 
Asian stocks were mostly higher in choppy trading on Wednesday following a big rally in U.S. markets, though gains were limited by persistent worries over Europe's ability to contain a simmering debt crisis.

Some markets zigzagged between gains and losses as investors weighed comments by a Federal Reserve official in support of more measures to stimulate the economy against the situation in Europe.

In Spain, ratings agency Fitch downgraded 18 banks and the government's borrowing costs rose to the highest level since adopting the euro currency. Investors are also worried that a European bailout for Spain's banks won't solve the country's problems amid fears that the contagion could spread to Italy. In Greece, investors are nervously looking ahead to an election on Sunday to see if a party that has vowed to throw out the country's bailout agreement will win.

U.S. stocks, meanwhile, staged one of their strongest rallies of the year after Charles Evans, president of the Fed's Chicago bank, told Bloomberg News he supported action to produce faster job growth.

"Even though the U.S. market rose strongly overnight because of the anticipation of quantitative easing, the market still in Asia is not convinced of the recovery," said Francis Lun, managing director of investment firm Lyncean Holdings Ltd. "So investors are very timid and dare not buy in the market right now."

Esprit Holdings Ltd. plummeted 21 percent in Hong Kong trading after the clothing chain said chief executive Ronald van der Vis resigned for personal and family reasons. It's another sign of trouble at Esprit, which has been struggling amid shrinking demand in one of its big markets, Europe.

In the U.S., the Dow rose 1.3 percent to close at 12,573.80. The Standard & Poor's 500 index gained 1.2 percent to 1,324.18, and the Nasdaq composite rose 1.2 percent to 2,843.07.

Benchmark oil for July delivery was down 42 cents to $82.90 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 62 cents to finish at $83.32 on Tuesday.

In currencies, the euro weakened to $1.2492 from $1.2498 late Tuesday in New York. The dollar rose to 79.63 yen from 79.49 yen.